Alliances
A new tab that replaces the Fellow tab, one can make an Ally of anyone ranking Count/Countess or above, who is not directly above or below one in their line. In other words, if we have Players A, B and C in the same line, in that order top to bottom, Player A may form an alliance with their Liege's Liege but not their own Liege. So A and C may be allies but not C and B nor A and B, presuming all are ranked Count or Countess or higher, of course. Also, it appears that there is a limit to how many Allies one may gain, 4 being the current noted limit.
To gain an Ally, stand near another player. Both players must be ranked Count/Countess or higher, have the Federation add on, have fewer than 4 allies already, and cannot already be in a liege/subject relationship with the other person. Should one player (or both) have ten (10) direct subjects already, the HUD will skip the process of offering the Liege Swap option and go more directly to the Ally option. Sometimes it may take a few cycles of offers to get the Ally option. It has been found if you click NO to the liege/subject option that comes up first, the next round will have the alliance option. It appears that the need to remove the HUD to initiate this process is gone and that when one is near an appropriate Ally, the option will appear in due time.
When one examines the Allies tab, each page is for an individual Ally, and there is an option to "Send Ambassador". Checking that box will cause a set of options to appear on the next turn. One then may select between the following: to do nothing, to send a gift (worth a specific amount of gold), to send a certain amount of citizens to build an embassy if one does not presently exist, or to break the alliance. If one selects to send a gift, they'll find that the next month they get to chose what of a number of gift items they'd prefer to send to their ally.
None of these functions allow one to directly send gold from one player to another. However, a gift of citizens can translate into significant long-term gold for one's ally through increased tax credits at census time and percentage bonuses to monthly homage income.
Breaking an alliance is difficult and expensive. It costs gold at a level comparable to building an embassy. Also, after the break a period of 24 online hours is enforced before one is able to make a replacement alliance, with the additional loss of gold production for that period if one formerly had four allies with embassies.
If at a later time an ally becomes a direct ( above or below ) then the alliance is broken along with any benefits ( embassy ).
Embassy
An embassy can be purchased, which will be built in the empire of one of your allies. The cost on an embassy is considerable (a bit over five times the cost of an acre of land) The Embassy can be bought at a discount during Trader years when you receive the buy land at low cost.
Once an Embassy is built, additional offers may appear. One type of offer is for the recipient of the embassy to read confidential papers of their ally. The offer also suggests that the ally might not find out. The cost to read the papers is considerable. The benefits/consequences of reading the papers is unknown.
Embassies increase the frequency of offers to sell land at a price above cost.
When one is sabotaged, if an ally with embassy is online that ally may get an opportunity to pay for an investigation. A successful investigation reverses the effects of sabotage and causes the perpetrator to lose the same number of acres.
The main benefit to an embassy is that the strengthened diplomatic relations let you transfer citizens without losing as many of them. You can also send more at one time. Without an embassy, 60 % of the citizens you transfer to an ally will leave for parts unknown. If you do have an embassy, only 25 % will be disgruntled and leave.
Maintaining four alliances and supporting four embassies is rewarded with increased production of +1 gold per acre per month.